Enabling an F1 team to reduce purchased-parts inventory by over £10m
Improving planning, purchasing and stock visibility
An F1 powertrain manufacturer was carrying rapidly increasing levels of purchased-parts inventory, tying up capital and increasing the risk of components becoming obsolete.
In Formula 1, the impact is particularly important because unnecessary and obsolete stock can also consume budget within tightly controlled FIA spending limits.
We worked with production, procurement and supply chain teams to understand what was driving the increase.
The main causes were operational. Production plans were changing too frequently, existing stock was not always being considered before new material was purchased, and inventory held by subcontractors was not consistently visible in SAP.
Over 12 weeks, we helped the team stabilise requirements, tighten purchasing decisions and create a clearer view of where inventory was sitting and why.
The programme contributed to a reduction of more than £10 million in purchased-parts inventory.
Key Issues
Frequent production changes
Production schedules were going through multiple iterations over short periods.
Parts could be ordered against one version of the plan, only for requirements to change shortly afterwards.
This created excess inventory and made it harder for procurement teams and suppliers to work against a stable demand signal.
Existing stock not used first
Stock already held by the business was not always fully considered before new orders were placed.
There were also opportunities to use existing parts in future development runs, but these were difficult for teams to identify.
That increased the risk of usable material becoming obsolete while replacement parts were purchased.
Limited visibility of inventory
The team lacked one trusted view of where purchased-parts inventory was held and where stock was increasing.
Material held at subcontractors was not always clearly represented in SAP, making it difficult to understand what was already available and to manage its consumption with external partners.
Approach
Reduced short-term schedule changes
We worked with the team to reduce the number of production schedule iterations taking place over short timeframes.
This created a more stable demand signal for procurement and suppliers and reduced the risk of parts being purchased against requirements that changed shortly afterwards.
Tighter purchasing controls
Additional checks were introduced before new orders were placed, taking existing inventory and future requirements into account.
The team also identified opportunities to use stock already on hand in future development runs, avoiding unnecessary purchases and reducing the risk of obsolescence.
Better management of subcontractor stock
The way externally held stock was represented in SAP was improved, giving teams a clearer picture of inventory sitting with subcontractors.
That visibility made it easier to work directly with external partners to consume existing material rather than allowing it to remain unused while further stock was purchased.
Sustainable inventory reporting
We created inventory reporting bringing historic stock trends and Pareto analysis into one place.
Teams could review inventory by department, supplier and external location, making it easier to identify where stock was accumulating and focus action where it would have the greatest impact.
Results
Reduction in purchased-parts inventory
Purchased-parts inventory was reduced by over £10 million.
Supplier OTIF
More stable requirements and lower unnecessary demand on the supply base played an important role in increasing supplier On Time In Full performance from around 55% to over 90%.
Transformation
The reporting developed during the project continues to support the F1 team with inventory, planning and purchasing decisions.
“We finally have visibility of inventory and we can already see improvement in the numbers.”Chief Operating Officer